Division M Makes a Part That It Sells to Customers

question 137

Multiple Choice

Division M makes a part that it sells to customers outside of the company.Data concerning this part appear below: Division O of the same company would like to use the part manufactured by Division M in one of its products.Division O currently purchases a similar part made by an outside company for $70 per unit and would substitute the part made by Division M.Division O requires 5,000 units of the part each period.Division M can sell every unit it produces on the outside market.What should be the lowest acceptable transfer price?

• A)$75
• B)$66
• C)$16
• D)$50
• E)$25

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Definitions:

Observer Reliability

The degree to which different observers consistently assess or record behaviors, outcomes, or events in the same way.

Test-Retest Reliability

A measure of the consistency of a psychological test or assessment when the same instrument is administered to the same group of people on two different occasions.

Test-Retest Reliability

The consistency of a measure assessed by administering the same test to the same group of individuals at two different points in time.

Face Validity

A measure of how suitable, relevant, or meaningful a test or procedure appears on the surface, even if not necessarily proven through empirical means.